Swedroe comments on buying individual stocks.

[JPatrick]

Quote:

Originally Posted by wab Well, I did pick MSFT, INTC, etc in the 80's.* *But I also bet big on Japan, Inc.* * That was a brilliant move till about 1990....

Fast forward to 2005 and lo and behold Japan is rising again.
Another big bet might be good again.* I tossed my chips down a few weeks ago 8)

[wabmester]

Quote:

Originally Posted by JPatrick Fast forward to 2005 and lo and behold Japan is rising again. Another big bet might be good again.* I tossed my chips down a few weeks ago 8)

I'm still holding my original position from around 1985. I'm sure I haven't hit break-even yet. But, I have continued to stupidly double-down along the road to ruin. I'll probably never give up on Japan, but I really don't expect them to grow very fast. I would *love* to get a piece of a J-REIT, though.

[lazyday]

Quote:

Originally Posted by wab Look, the odds are on the market doing pretty well over the long term. There's always the chance, however slim, that long-term returns will be negative. There's also a slim chance that long-term returns will be through the roof. So, the way I approach this is: 1) Start with more money than you need 2) Protect a core nest egg with very conservative investments (like TIPS) that will cover your basic needs 3) Keep some real assets for an unmitigated disaster in case you need to trade something with the invading forces, for example 4) Take the rest, and put it in more risky investments, like the stock market

Something along those lines would be nice, but I don't have enough $.
Instead of holding lots of riskless assets, my fallback plan is to work if markets do poorly enough.
Otherwise, if I wanted to be prepared for truly horrid future returns, I'd have to work... now.

[justin]

Quote:

Originally Posted by JPatrick Fast forward to 2005 and lo and behold Japan is rising again. Another big bet might be good again. I tossed my chips down a few weeks ago 8)

I'd have to say my current investment in the Vanguard Pacific stock index fund (primarily a Japan Stock index fund) has been my best investment ever. I was lucky when I started buying three months ago and already have double digit gains. It was my first Vanguard fund and I decided to start a passive diversified index based approach to investing. I looked at all the indexes out there, and decided Japan was the most beat up, the least talked about, and had an amazing price to book ratio. I thought I was using skill, but in hindsight, it was probably luck. Unfortunately for me, it took off too quick for me, since I'm still DCA'ing into it!

[wabmester]

Since we're talking about individual stocks and Japan, here's my pick. As I mentioned, I only pick individual stocks once in a blue moon, so I like to focus on a combination of value and long-term growth prospects. The last big position I took was in Toyota (TM) in 2003. It basically is the Japanese market (largest cap on the NIKKEI), it had been beat up for no reason, and it was clear that they were taking market share away from US makers, maintaining high margins in the face of US price cutting, and had come out with the best hybrid solution. So far, it's gone from 40-something to 90 in that timeframe. I don't expect it to continue to grow at that rate, but I do expect it to remain one of my long-term holdings.

[lazyday]

Wab, have you looked into Toyota Industries (formerly called Toyoda Loom Works, IIRC)? A way of buying Toyota at a discount, according to Marty Whitman in quarterly reports of TAVFX. Holds lots of Toyota stock, but sells cheaper than NAV acc to Marty. Probably have to buy on a Japanese exchange.

[justin]

I took a glance at the VPACX (Vanguard Pacific stock index fund) top ten holdings. Many recognizable names - Besides Toyota, there's Sony, Honda, and Canon in addition to a few Japanese and Australian financial powerhouses. I know a lot of those companies get money from me and many others I know.

[ESRBob]

Late to the thread, but I throw my lot in with Swedroe-- his real point, as I read it, is that picking, owning and selling individual stocks takes a huge amount of time and brain cycles, and produces little clear benefit vs owning indexes. Spend the time you free up with the kids, with a friend, learning a new sport,whatever.

Individual stock picking/owning is like a part time job, maybe a full-time job. If we ER in order to take a full-time job as a stock picker, we might as well try to get hired by a fund and do the same thing for a heckuvalot more money.